23314 Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 

11 15 U.S.C. 78s(b)(3)(A)(ii). 

12 17 CFR 240.19b–4(f)(2). 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61742 

(March 19, 2010), 75 FR 14646 (‘‘Notice’’). 

4See Securities Exchange Act Release No. 57894 

(May 30, 2008), 73 FR 32061 (June 5, 2008) (SR– 

ISE–2008–12). 

5See Securities Exchange Act Release No. 59055 

(December 4, 2008), 73 FR 75148 (December 10, 

2008) (SR–ISE–2008–58). 

6See Securities Exchange Act Release No. 61483 

(February 3, 2010), 75 FR 6753 (February 10, 2010) 

(SR–ISE–2009–106). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 11 and 

paragraph (f)(2) of Rule 19b–4 12

thereunder. At any time within 60 days 

of the filing of the proposed rule change, 

the Commission may summarily 

abrogate such rule change if it appears 

to the Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2010–60 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2010–60. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–Phlx–2010–60 and should 

be submitted on or before May 24, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–10211 Filed 4–30–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61983; File No. SR–ISE– 

2010–19] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Order Granting Approval of 

Proposed Rule Change To List and 

Trade Options on the ETFS Palladium 

Trust and the ETFS Platinum Trust 

April 26, 2010. 

On March 5, 2010, the International 

Securities Exchange, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b-4 

thereunder,2 a proposed rule change to 

list and trade options on the ETFS 

Palladium Trust and the ETFS Platinum 

Trust (collectively ‘‘ETFS Options’’). The 

proposed rule change was published in 

the Federal Register on March 26, 

2010.3 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change. 

I. Description of Proposal 

Recently, the Commission authorized 

ISE to list and trade options on the 

SPDR Gold Trust,4 the iShares COMEX 

Gold Trust and the iShares Silver 

Trust,5 the ETFS Gold Trust and the 

ETFS Silver Trust.6 Now, the Exchange 

proposes to list and trade options on the 

ETFS Palladium Trust and the ETFS 

Platinum Trust. 

Under current ISE Rule 502(h), only 

Exchange-Traded Fund Shares, or ETFs, 

that are traded on a national securities 

exchange and are defined as an ‘‘NMS’’ 

stock under Rule 600 of Regulation 

NMS, and that: (i) Represent interests in 

registered investment companies (or 

series thereof) organized as open-end 

management investment companies, 

unit investment trusts or similar entities 

that hold portfolios of securities and/or 

financial instruments, including, but not 

limited to, stock index futures contracts, 

options on futures, options on securities 

and indices, equity caps, collars and 

floors, swap agreements, forward 

contracts, repurchase agreements and 

reverse repurchase agreements (the 

‘‘Financial Instruments’’), and money 

market instruments, including, but not 

limited to, U.S. government securities 

and repurchase agreements (the ‘‘Money 

Market Instruments’’) comprising or 

otherwise based on or representing 

investments in broad-based indexes or 

portfolios of securities and/or Financial 

Instruments and Money Market 

Instruments (or that hold securities in 

one or more other registered investment 

companies that themselves hold such 

portfolios of securities and/or Financial 

Instruments and Money Market 

Instruments); or (ii) represent interests 

in a trust that holds a specified non-U.S. 

currency or currencies deposited with 

the trust when aggregated in some 

specified minimum number may be 

surrendered to the trust by the 

beneficial owner to receive the specified 

non-U.S. currency or currencies and 

pays the beneficial owner interest and 

other distributions on the deposited 

non-U.S. currency or currencies, if any, 

declared and paid by the trust (‘‘Funds’’); 

or (iii) represent commodity pool 

interests principally engaged, directly or 

indirectly, in holding and/or managing 


erowe on DSK5CLS3C1PROD with NOTICES
Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 23315 

7See ISE Rule 502(h). 

8See ISE Rules 412 and 414. 

9See ISE Rule 1202. 

10 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

11 15 U.S.C. 78f. 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78f(b)(1). 

14See NASD Rule 2320. 

15See ISE Rule 616. 

16See FINRA Rule 2360(b) and ISE Rules 608 and 

610. 

portfolios or baskets of securities, 

commodity futures contracts, options on 

commodity futures contracts, swaps, 

forward contracts and/or options on 

physical commodities and/or non-U.S. 

currency (‘‘Commodity Pool ETFs’’); or 

(iv) represent interests in the SPDR® 

Gold Trust, the iShares COMEX Gold 

Trust, the iShares Silver Trust, the ETFS 

Gold Trust or the ETFS Silver Trust; or 

(v) represents an interest in a registered 

investment company (‘‘Investment 

Company’’) organized as an open-end 

management company or similar entity, 

that invests in a portfolio of securities 

selected by the Investment Company’s 

investment adviser consistent with the 

Investment Company’s investment 

objectives and policies, which is issued 

in a specified aggregate minimum 

number in return for a deposit of a 

specified portfolio of securities and/or a 

cash amount with a value equal to the 

next determined net asset value 

(‘‘NAV’’), and when aggregated in the 

same specified minimum number, may 

be redeemed at a holder’s request, 

which holder will be paid a specified 

portfolio of securities and/or cash with 

a value equal to the next determined 

NAV (‘‘Managed Fund Share’’) are 

eligible as underlying securities for 

options traded on the Exchange.7 This 

rule change proposes to expand the 

types of ETFs that may be approved for 

options trading on the Exchange to 

include the ETFS Palladium Trust and 

the ETFS Platinum Trust. 

Apart from allowing the ETFS 

Palladium Trust and the ETFS Platinum 

Trust to be an underlying for options 

traded on the Exchange as described 

above, the listing standards for ETFs 

will remain unchanged from those that 

apply under current Exchange rules. 

ETFs on which options may be listed 

and traded must still be listed and 

traded on a national securities exchange 

and must satisfy the other listing 

standards set forth in ISE Rule 502(h). 

Specifically, in addition to satisfying 

the aforementioned listing 

requirements, ETFs must meet either: 

(1) The criteria and guidelines under 

ISE Rules 502(a) and (b); or (2) they 

must be available for creation or 

redemption each business day from or 

through the issuing trust, investment 

company, commodity pool or other 

entity in cash or in kind at a price 

related to net asset value, and the issuer 

must be obligated to issue ExchangeTraded Fund Shares in a specified 

aggregate number even if some or all of 

the investment assets and/or cash 

required to be deposited have not been 

received by the issuer, subject to the 

condition that the person obligated to 

deposit the investment assets has 

undertaken to deliver them as soon as 

possible and such undertaking is 

secured by the delivery and 

maintenance of collateral consisting of 

cash or cash equivalents satisfactory to 

the issuer, as provided in the respective 

prospectus. 

The Exchange states that the current 

continued listing standards for options 

on ETFs will apply to options on the 

ETFS Palladium Trust and the ETFS 

Platinum Trust. Specifically, under ISE 

Rule 503(h), options on ExchangeTraded Fund Shares may be subject to 

the suspension of opening transactions 

as follows: (1) Following the initial 

twelve-month period beginning upon 

the commencement of trading of the 

Exchange-Traded Fund Shares, there are 

fewer than 50 record and/or beneficial 

holders of the Exchange-Traded Fund 

Shares for 30 or more consecutive 

trading days; (2) the value of the 

underlying palladium or underlying 

platinum is no longer calculated or 

available; or (3) such other event occurs 

or condition exists that in the opinion 

of the Exchange makes further dealing 

on the Exchange inadvisable. 

Additionally, the ETFS Palladium 

Trust and the ETFS Platinum Trust shall 

not be deemed to meet the requirements 

for continued approval, and the 

Exchange shall not open for trading any 

additional series of option contracts of 

the class covering the ETFS Palladium 

Trust and the ETFS Platinum Trust, 

respectively, if the ETFS Palladium 

Trust and the ETFS Platinum Trust 

ceases to be an ‘‘NMS stock’’ as provided 

for in ISE Rule 503(b)(5) or the ETFS 

Palladium Trust and the ETFS Platinum 

Trust is halted from trading on its 

primary market. 

The addition of the ETFS Palladium 

Trust and the ETFS Platinum Trust to 

ISE Rule 502(h) will not have any effect 

on the rules pertaining to position and 

exercise limits 8 or margin.9

The Exchange represents that its 

surveillance procedures applicable to 

trading in options on the ETFS 

Palladium Trust and the ETFS Platinum 

Trust will be similar to those applicable 

to all other options on other ETFs 

currently traded on the Exchange. Also, 

the Exchange may obtain information 

from the New York Mercantile 

Exchange, Inc. (‘‘NYMEX’’) (a member of 

the Intermarket Surveillance Group) 

related to any financial instrument that 

is based, in whole or in part, upon an 

interest in or performance of palladium 

or platinum. 

II. Commission Findings 

After careful consideration, the 

Commission finds that the proposed 

rule change submitted by ISE is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange 10 and, in particular, 

the requirements of Section 6 of the 

Act.11 Specifically, the Commission 

finds that the proposal is consistent 

with Section 6(b)(5) of the Act,12 which 

requires, among other things, that the 

rules of a national securities exchange 

be designed to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest. In 

accordance with the Memorandum of 

Understanding entered into between the 

Commodity Futures Trading 

Commission (‘‘CFTC’’) and the 

Commission on March 11, 2008, and in 

particular the addendum thereto 

concerning Principles Governing the 

Review of Novel Derivative Products, 

the Commission believes that novel 

derivative products that implicate areas 

of overlapping regulatory concern 

should be permitted to trade in either or 

both a CFTC- or Commission-regulated 

environment, in a manner consistent 

with laws and regulations (including the 

appropriate use of all available 

exemptive and interpretive authority). 

As a national securities exchange, the 

ISE is required under Section 6(b)(1) of 

the Act 13 to enforce compliance by its 

members, and persons associated with 

its members, with the provisions of the 

Act, Commission rules and regulations 

thereunder, and its own rules. In 

addition, brokers that trade ETFS 

Options will also be subject to best 

execution obligations and FINRA 

rules.14 Applicable exchange rules also 

require that customers receive 

appropriate disclosure before trading 

ETFS Options.15 Further, brokers 

opening accounts and recommending 

options transactions must comply with 

relevant customer suitability 

standards.16

ETFS Options will trade as options 

under the trading rules of the ISE. These 

rules, among other things, are designed 

to avoid trading through better 


erowe on DSK5CLS3C1PROD with NOTICES
23316 Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 

17See ISE Rule 1902. Specifically, ISE is a 

participant in the Options Order Protection and 

Locked/Crossed Market Plan. 

18 17 CFR 242.600. 

19See ISE Rule 502(a)–(b). 

20See ISE Rules 412 and 414. 

21See ISE Rule 1202. See also FINRA Rule 

2360(b) and Commentary .01 to FINRA Rule 2360. 

22 15 U.S.C. 78s(b)(2). 

23 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61510 

(February 5, 2010), 75 FR 7530 (‘‘Notice’’). 

4Amendment No. 2 reflects changes to FINRA 

Rule 6635 that were made in SR–FINRA–2010–002, 

which was filed with the Commission for 

immediate effectiveness on January 14, 2010. See 

Securities Exchange Act Release No. 61427 (January 

27, 2010), 75 FR 5834 (February 4, 2010). 

5 17 CFR 230.144A. 

6See Securities Act Release No. 6862 (April 23, 

1990), 55 FR 17933 (April 30, 1990). For the 

purpose of SEC Rule 144A, a QIB is generally 

defined as any institution acting for its own 

account, or for the accounts of other QIBs, that in 

the aggregate owns and invests on a discretionary 

basis at least $100 million in securities of issuers 

that are not affiliated with the institution. 

7See Securities Exchange Act Release No. 27956 

(April 27, 1990), 55 FR 18781 (May 4, 1990). 

8See Securities Exchange Act Release No. 58638 

(September 24, 2008), 73 FR 57188 (October 1, 

2008). As part of the separation of NASDAQ from 

FINRA, certain functionality relating to PORTAL, 

including the qualification and designation of 

PORTAL securities, became part of NASDAQ’s 

rules and were eliminated from the NASD rules. 

See Securities Exchange Act Release No. 53128 

(January 13, 2006), 71 FR 3550 (January 23, 2006). 

9 In addition to NASDAQ ceasing operation of the 

PORTAL Market, the Commission has also 

approved the deletion of the Depository Trust 

Company (‘‘DTC’’) requirement that a SEC Rule 

144A security, other than investment grade 

securities, be included in an ‘‘SRO Rule 144A 

System’’ in order to be eligible for DTC’s deposit, 

book-entry delivery, and other depository services. 

See Securities Exchange Act Release No. 59384 

(February 11, 2009), 74 FR 7941 (February 20, 

2009). The PORTAL Market was the only ‘‘SRO Rule 

144A System.’’ Id. 

10Securities Exchange Act Release No. 60991 

(November 12, 2009), 74 FR 60006 (November 19, 

2009). 

11See id. NASDAQ noted in the filing that 

nothing in the proposal was ‘‘intended to impact 

securities previously designated as PORTAL 

securities or alter any existing regulatory obligation 

applicable to such securities, including, but not 

limited to, any trade reporting obligation imposed 

by any self-regulatory organization.’’ Id. 

displayed prices for ETFS Options 

available on other exchanges and, 

thereby, satisfy ISE’s obligation under 

the Options Order Protection and 

Locked/Crossed Market Plan.17 Series of 

the ETFS Options will be subject to 

exchange rules regarding continued 

listing requirements, including 

standards applicable to the underlying 

ETFS Silver and ETF Gold Trusts. 

Shares of the ETFS Silver and ETFS 

Gold Trusts must continue to be traded 

through a national securities exchange 

or through the facilities of a national 

securities association, and must be 

‘‘NMS stock’’ as defined under Rule 600 

of Regulation NMS.18 In addition, the 

underlying shares must continue to be 

available for creation or redemption 

each business day from or through the 

issuer in cash or in kind at a price 

related to net asset value.19 If the ETFS 

Silver or ETFS Gold Trust shares fail to 

meet these requirements, the exchanges 

will not open for trading any new series 

of the respective ETFS Options. 

ISE has represented that it has 

surveillance programs in place for the 

listing and trading of ETFS Options. For 

example, ISE may obtain trading 

information via the ISG from the 

NYMEX related to any financial 

instrument traded there that is based, in 

whole or in part, upon an interest in, or 

performance of, palladium or platinum. 

Additionally, the listing and trading of 

ETFS Options will be subject to the 

exchange’s rules pertaining to position 

and exercise limits 20 and margin.21

III. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,22 that the 

proposed rule change (SR–ISE–2010–19) 

be, and is hereby, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–10212 Filed 4–30–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61979; File No. SR–FINRA– 

2010–003] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change, as Modified by 

Amendment Nos. 1 and 2, Relating to 

Trade Reporting of OTC Equity 

Securities and Restricted Equity 

Securities 

April 23, 2010. 

I. Introduction 

On January 15, 2010, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’ 

or ‘‘SEC’’), pursuant to Section 19(b)(1) 

of the Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a 

proposed rule change relating to trade 

reporting of OTC Equity Securities and 

certain restricted equity securities. On 

February 5, 2010, FINRA filed 

Amendment No. 1 to the proposed rule 

change. The proposed rule change, as 

modified by Amendment No. 1, was 

published for comment in the Federal 

Register on February 19, 2010.3 The 

Commission received no comment 

letters on the proposed rule change. On 

March 25, 2010, FINRA filed 

Amendment No. 2 to the proposed rule 

change.4 Because Amendment No. 2 is 

technical in nature, the Commission is 

not publishing it for comment. This 

order approves the proposed rule 

change, as modified by Amendment 

Nos. 1 and 2. 

Background 

In 1990, the SEC adopted Rule 144A 

(‘‘SEC Rule 144A’’) under the Securities 

Act of 1933 5 (‘‘Securities Act’’) to 

establish a safe harbor for the private 

resale of ‘‘restricted securities’’ to 

‘‘qualified institutional buyers’’ 

(‘‘QIBs’’).6 At the same time, FINRA 

(formerly known as the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’)) created the PORTAL Market 

to serve as a system for quoting, trading, 

and reporting trades in certain 

designated restricted securities that 

were eligible for resale under SEC Rule 

144A (‘‘PORTAL securities’’).7 In 

September 2008, the NASDAQ Stock 

Market (‘‘NASDAQ’’) ceased the 

operation of the PORTAL Market.8

NASDAQ explained in its rule filing 

that it is taking a minority stake in a 

consortium that will control and operate 

a new electronic platform for handling 

transactions in SEC Rule 144A-eligible 

securities.9 In October 2009, NASDAQ 

filed a proposed rule change with the 

Commission for immediate effectiveness 

terminating NASDAQ’s PORTAL 

security designation process and 

removing rules related to the PORTAL 

Market from its rulebook.10 As a result, 

NASDAQ no longer accepts new 

applications for debt or equity securities 

seeking PORTAL designation.11

In the instant rule proposal, FINRA 

has proposed to delete certain PORTAL 

rules from its rulebook, amend certain 

other rules to address gaps that 

elimination of such PORTAL rules 

would create, amend certain definitions 

to create consistent use of terminology 

in FINRA rules, and make certain other 

clarifying changes. 

III. Description of the Proposal 

Current FINRA Rule 6610 requires 

that members report transactions in 

‘‘OTC Equity Securities’’ to the OTC 


erowe on DSK5CLS3C1PROD with NOTICES